The UK wealth management industry has a long history, and this is reflected in the profile of the country's high net worth (HNW) clients. The majority originate from the financial services industry and are sophisticated enough to deal with their financial affairs. However, to save time they opt for discretionary asset management services, as UK wealth managers maintain their reputation as trusted professionals. Investment portfolios are built around traditional asset classes such as equities and bonds, but alternatives are gaining importance. On the other hand, recent legal changes may cause a shift in demand for certain services, creating opportunities not only for existing competitors but for potential new entrants.

Key Findings

Entrepreneurs account for 50% of the UK's HNW population, but earned income and inheritance are also importance sources of wealth.

The majority of HNW expats residing in the UK come from France, Germany, and the US. The expat population is likely to be affected by the government's changes to taxation of the non-domiciled.

Discretionary management is strongly preferred by UK HNW clients, who hire professional wealth managers in order to save time. Demand for execution-only platforms is very limited.

Equities and bonds are major components of UK HNW investors' well-diversified portfolios. No significant changes to asset management strategies are forecast, although wealth managers should prepare their clients' portfolios for shifts in the Bank of England's monetary policy.

Profiling The Uk Hnw InvestorThe source of UK HNW wealth is dominated by entrepreneursA diversified market still requires a focus on entrepreneurs and business ownersMany HNW individuals have built their fortunes through financial servicesUK wealth managers should be targeting expatsExpats account for 6.8% of the UK HNW populationThe vast majority of HNW expats originate from France, Germany, and the USHNW expats invest in the UK as they do not plan to return to their home countriesIncreased capital requirements for investor visas have impacted the flow of HNW individuals from outside the EEAThe tax regime changes should be considered by wealth managers targeting expats

Hnw Investment Style PreferencesUK HNW individuals have professionals manage their wealthLack of time triggers UK HNW investors to use wealth managers' servicesOver three quarters of UK HNW wealth is held in discretionary mandatesDemand for advisory and execution-only services is limitedThe asset management competitive landscape is unlikely to changeDemand for execution-only services will increase only slightlySelf-directed HNW investors look for independence

Understanding Asset Allocation Trends Among Uk Hnw InvestorsUK HNW investors see the point in long-term equity investmentsEquities dominate HNW portfolios and this is unlikely to changeEquities account for 58% of the average HNW portfolioAfter equities, bonds are the second most important component of UK HNW portfoliosDeposits are less important for HNW portfolios in the UK compared to Western EuropeProperty investment is underweight in UK HNW portfoliosCommodities play a marginal role in UK HNW portfolios8% of assets in HNW portfolios is invested in alternatives

Figure 1: First-generation entrepreneurs and family business owners account for half of the UK HNW populationFigure 2: Financial services is the most significant driver of UK HNW wealthFigure 3: The vast majority of UK HNW expats have been in the country for over three yearsFigure 4: 75% of UK HNW expats come from France, Germany, and the USFigure 5: HNW expats living in the UK want to stay in control of their investmentsFigure 6: UK HNW investors do not have enough time to manage their money on their ownFigure 7: 78% of HNW assets are managed in discretionary mandatesFigure 8: Wealth managers experience weak demand for advisory and execution-only mandatesFigure 9: UK wealth managers do not predict much change in demand for investment management servicesFigure 10: HNW investors self-direct to retain control over some of their portfolioFigure 11: UK HNW portfolios are dominated by equitiesFigure 12: Compared to Western Europe, UK investors allocate more assets to equity fundsFigure 13: UK HNW investors think about diversification when investing in equitiesFigure 14: UK HNW investors prefer bond funds to direct debt securities holdingsFigure 15: Risk-averse HNW investors opt for bondsFigure 16: UK HNW portfolios contain a smaller share of deposits than in Western EuropeFigure 17: UK HNW investors will increase their allocations in depositsFigure 18: UK HNW clients are not fond of property investmentsFigure 19: Wealth managers do not expect demand for investment property to changeFigure 20: Similarly to Western Europe, in the UK only 1% of portfolios is allocated to commoditiesFigure 21: Most UK wealth managers predict no change in demand for commoditiesFigure 22: 8% of HNW investments is allocated to alternativesFigure 23: Over the next year demand for alternatives will increase slightlyFigure 24: Demand for inheritance advice is lower than for other planning services in the UKFigure 25: A significant increase in demand for all planning services is forecastFigure 26: Demand for tax planning is stronger in the UK than in Western EuropeFigure 27: UK HNW individuals will show increasing demand for investment property advice

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